For many in the construction and related industries, construction defects legislation is among the most impactful on their businesses. According to the Urban Land Institute (ULI) among others, we can expect to see more bills related to this issue in the next legislature.

What has been termed a construction industry “smackdown,” is between developers/construction industry businesses and those who want to protect consumers from shoddy workmanship via defects litigation. In a somewhat over-simplified statement, it all comes down to condos.

During the last 10 years many condo developers have been sued over construction defects with the result that permits to build condos are down to almost zero. Apartment building, on the other hand, may be over built as a result. Developers are reluctant to build condos given the threat of construction defects litigation and the increased cost of construction defects insurance – which is three times as that for apartment construction.

The net result of these increased costs is higher-priced condos that become unaffordable to the first-time homebuyers who tend to start out in condos. Adding just $15,000 to the cost of a $200K condo prices it beyond the buying power of the target market. Advocates for affordable housing are concerned by the removal of that critical first step toward home ownership.

Advocates for transit-oriented development (TODs) insist that condos are a key component in making a mixed-use, walkable environment successful. Many in the construction industry – with support from the Metro Mayors Caucus and others – support legislation that would make it harder to sue or that would provide other forms of resolution.

ALCC through its involvement with GreenCO’s legislative task force and lobbyist will be monitoring bills introduced in the next legislative session and updating members about grass roots efforts that may be underway in response. ALCC/GreenCO has supported bills in the last two legislative sessions that would have made it more difficult to sue over construction defects and has also backed bills in support of TODs.